Today’s AM fix was USD 1,370.50, EUR 1,027.28 and GBP 879.60 per ounce.
Yesterday’s AM fix was USD 1,360.00, EUR 1,015.38 and GBP 867.29 per ounce.
Gold fell $3.90 or 0.28% yesterday, closing at $1,367.40/oz. Silver fell $0.07 or 0.3%, closing at $22.93. Platinum fell $3.11 or .2% to $ 1,509.49/oz, while palladium was down $5.78 or .8% to $741.22/oz.
Read our special report: London Bullion Market Association - Beyond the Smoke and Mirrors [9]
Gold edged down for a second session yesterday but spiked higher today prior to determined selling was seen at the $1,375/oz level. Geopolitical instability in the Middle East with the deteriorating situations in Syria and Egypt will support gold.
The U.S. FOMC policy meeting minutes told investors nothing new. The next Fed policy meeting is September 17th and 18th. Investors believe that decreasing the $85 million per month in bond purchases will happen in September.
This will likely create significant volatility in markets with the stock market vulnerable to a sharp correction after recent strong gains.
Gold Prices/ Fixes/ Rates / Volumes - (Bloomberg) [10]
Premiums on the Shanghai Gold Exchange rose from $21 yesterday to $22.40 (0800 GMT) over London spot showing robust physical demand in China. Demand from the over 2 billion people, rich and poor, in China and India alone this year alone is set to be 1,000 metric tonnes which is worth over $87 billion or roughly what the Federal Reserve is printing every single month.
Gold is off almost 20% year to date, but has risen 16% from a 34-month low of $1,180.71/oz on June 28 as lower prices led to physical bullion demand throughout the world.
Source: U.S. Mint [11]
Sales of U.S. Mint American Eagle gold coins so far in August are down sharply from August last year and from recent months sales as gold coin buyers, particularly in the U.S. ease off their recent gold coin buying spree which has seen record demand in recent months and recent years.
The U.S. mint sold 3,500 ounces of gold American Eagles so far this month, down from the near record levels seen in recent months.
Demand may have fallen as the relatively small eagle coin buying community, primarily in the U.S., has secured their allocation to bullion in recent months and indeed years and many are now fully allocated.
The U.S. mint was cleared out of its gold coin inventory in April after the astonishing 15% two day price plunge saw store of value buyers buy gold coins and bars in volume. This may have brought forward some of the demand that we were likely to see in the summer months this year.
There has also been some large liquidations in the secondary market with some high net worth coin buyers choosing to reduce allocations and take profits in recent months.
Total gold coin sales may still reach a new record in 2013 especially if markets become volatile if QE slows down and as Bernanke leaves office. Gold coin purchases are at 684,500 ounces so far this year, compared with 753,000 ounces in all of 2012, Mint data shows.
Sales of American Eagle silver coins are on track for a record. Sales are at 31.9 million ounces eight months into this year, compared with 33.7 million in all of 2012.
Gold bar and coin purchases reached a record last quarter and jewelry usage rose to the most since 2008, World Gold Council figures showed last week. American Eagle gold coin sales were valued at $1.26 billion last year.
Dr Constantin Gurdgiev is one of the few economists in the world to have looked at and researched the gold bullion coin market and continues to do.
On his excellent economics research website, True Economics, he has conducted another analysis of U.S. Mint gold coin sales looking at US Mint Gold Sales: H1 2013 [13] .
The key insights from his research piece are the following:
In H1 2013, US Mint sold 629,000 oz of coinage gold, marking the 5th highest ranked H1 in sales terms since H1 1987. Year on year, H1 2013 sales were up 86.1% and relative to crisis period average, sales were up 22.0%, while relative to the pre-crisis period (2001-2007) H1 2013 coinage gold sales were up 261.5%. For comparison, historical H1 average sales are currently at 336,520 oz.
In H1 2013, US Mint sold 1,088,500 coins, marking the third busiest H1 sales period since 1987. For comparison, historical average sales for H1 are at 592,615 coins.
In terms of average gold volume per coin sold, H1 2013 came it at 0.578 oz/coin, which is relatively moderate, given the historical average of 0.577 oz/coin.
Chart above shows that both coins sales and oz sales of coinage gold remained in H1 2013 on the upward trend established since 2007 and the overall 2009-2013 activity for H1 period remains at post-1999 highs. There is little indication of any serious long-term slowdown in demand for US Mint coins in the data and H1 2013 strengthened the trend away from such moderation. The correction sustained over 2011-2012 has now been more than reversed and H1 2013 numbers in terms of coins sold is sitting comfortably above previous post-1999 maximum attained in 2010.
At the same time, demand for coinage gold (oz sold), while partially correcting upward in H1 2013 remains below the local maxima set in 2009-2010.
It is worth noting that H1 2013 figures were driven largely by January )month 1 of Q1) and April (month 1 of Q2) sales. This dynamic did not replicate in July (month 1 of Q3), so we should tread cautiously in expecting robust continuation of the H1 sales in H2.
